Picks, shovels and patience: a framework for global equities today

Troy Armstrong approaches global equities with a sector-first lens. Rather than starting from geographic weights or benchmark tilts, he thinks about where the genuinely interesting structural stories are playing out, and positions accordingly.

The domestic picture, in his view, is mixed.

“Australia has become more interesting across the resources space,” he says, “with the move toward electrification and the increase in the world’s need for electricity, whichever way they can produce it.”

That is a meaningful tailwind for a market well-endowed with the minerals the energy transition requires. Beyond resources, however, his enthusiasm cools. “Overvalued banks are probably not the place you want to be currently.”

Australian small and mid-caps offer pockets of opportunity, but the concentrated weight in financials and resources shapes how much of a client’s equity allocation the domestic market can realistically carry.

Globally, the opportunity set looks different. Technology and defence are his preferred exposures, both sectors with structural growth drivers that are largely absent from the Australian market.

The tilt is less about chasing short-term momentum and more about owning the industries that are likely to compound earnings over the decade ahead.

On concentration and what clients understand

Armstrong is relatively relaxed about US concentration in the global benchmark, at least in the current environment.

“Clients understand this, and given the earnings momentum across AI and technology, it’s a level of concentration that is working.” That is a pragmatic observation rather than an unconditional endorsement.

Concentration that is earning its keep is different from concentration that has become structural without a matching return justification. Emerging markets occupy a more constructive position in his thinking than the cautious consensus might suggest.

The case rests on demographics, the continuing rise of the middle class across South East Asia, India, and select economies in Northern Africa and Latin America, and on the macro tailwind from a softening US dollar.

“With the continued rise of the middle class across Eastern Asia, as well as India and select countries in Northern Africa and Latin America, an allocation to EM, for those with a growth risk profile, would absolutely be something to consider,” he says.

A declining dollar makes the thesis more compelling, easing financial conditions across EM economies and supporting capital flows into the asset class.

Active management and the AI question

On the active versus passive debate, Armstrong takes a direct line. “Cheap isn’t good and good isn’t cheap. Active really should always earn its keep if you use the right managers.”

This is a position that places the selection question at the centre, rather than defaulting to either camp on principle. The manager matters more than the category.

His view on AI is one of the more considered in the current advice market. The dominant tendency has been to either overweight enthusiasm or to dismiss concentration risk as overblown. Armstrong stakes out different ground. He is not trying to catch the top of the AI trade, but he is not avoiding it either.

“The picks and shovels with off-take agreements could be the best way to play this industrial transition whilst semi watching from the sidelines.”

“No one knows all the winners nor the losers yet,” he says. “We have years for this to play out.”

The missing-the-pop concern is real, but in his framing, it is outweighed by a different risk entirely. “Yes, missing the ‘pop’ may hurt, but not nearly as much as the ‘burst’ will.”

Infrastructure-oriented exposures, those supplying the physical and energy requirements of AI rather than speculating on its application winners, offer a more durable way to participate.

Time horizon and currency

On currency, Armstrong anchors his view to investment horizon. For clients with a long-term buy-and-hold orientation, the hedging question diminishes in importance. “Longer-term, ten years plus, it historically doesn’t matter all that much.”

In the short to medium term, the current US dollar and Australian dollar outlook makes hedged exposures worth considering. The discipline, he says, is not to mistake a short-term currency position for a long-term structural view.